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Consumer Focus deputy chief executive Philip Cullum said its research showed consumers overpaying by around £74 per household since the start of the year.

He called for a further 8 per cent cut which would save £157 on current prices by the winter.

"Energy firms should take immediate action to put things right. A failure to act, and to ensure that people pay a fair price for energy, could have serious consequences for the sector," he said.

But Garry Felgate, chief executive of the ERA, said the watchdog had made basic mistakes in its report.

He said: "The amount of gas and electricity a customer uses can form as little as half their annual bill.

"The remainder includes other costs, such as transporting gas and power and meeting the Government's carbon emissions reduction targets - all these costs have risen sharply in recent years."

Ofgem, in a statement, said: "We are concerned that their approach may mislead consumers."

Mr Cullum responded that the figures were "robust" and the group had taken into account the extra costs mentioned by the ERA.

Michelle Mitchell, charity director for Age Concern and Help the Aged, said the Consumer Focus findings were "scandalous".

"Energy companies are shamelessly maximising profits at the expense of their customers, forcing some to cut back on heating in an attempt to reduce bills," she said.

Meanwhile, Britain was named in a Europe-wide competition crackdown on an "ill-functioning" energy market.

The European Commission has sent formal notices of legal action to 25 of 27 member states for breaching rules on consumer protection, transparency and pricing.

Andris Piebalgs, the energy commissioner, said: "In this time of economic and financial crisis, it is simply unacceptable that European consumers and companies suffer the burden of an ill-functioning energy market."